Kenya: Fuel Price Regulation Set in Motion
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Monday, 17 November 2008 |
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The Kenyan Government has finally set in motion a process to regulate fuel prices.
In a move that shows determination to reign in on oil marketers who
have refused to reduce prices despite a significant drop of crude oil
in the international market, the Energy Regulatory Commission (ERC)
yesterday put out a statement explaining the formula of setting retail
pump prices.
According to the Government, fuel prices under the new structure should
be averaging Sh75 per litre instead of the current retail price of Sh94
for Super and Sh88 for Diesel. The formula is based on the price of
crude oil in the international market and takes into account all the
costs oil companies incur from importing the commodity to the point it
reaches the consumers.
These costs include transportation, storage, refinery, taxes, proximity to a depot and a profit margin.
"The prices determined using the formula shall be the maximum retail
pump price of petroleum products, which a person carrying on petroleum
business shall sell at a retail dispensing site," said the statement,
signed by ERC Director General Kaburu Mwirichia. It said dealers who
fail to adhere to the new regulations would be liable to a fine not
exceeding Sh1 million or withdrawal of the operating license or both.
Although Mwirichia could not give a timeframe, PetrolWorld understands
that the introduction of price controls could be early 2009.
PetrolWorld 151108
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